The industry is calling for urgent action on stamp duty tax after the release of the federal government’s tax discussion paper, which admits it can be a “tax burden” on consumers.
Despite stamp duties on the transfer of residential and commercial property being the second-largest source of state tax revenue – generating 24% of state tax revenue – the federal government’s tax discussion paper, released yesterday, concedes that the “highly volatile” tax can be a burden on many consumers.
“Stamp duties also impact on consumers by increasing the cost of buying and selling houses. As house prices increase over time, unadjusted progressive tax rates also increase the tax burden associated with stamp duty,” the paper said.
“For example, the burden of stamp duty on a median-priced house in Melbourne has almost doubled over the past 20 years — from 2.67% of the sale price in 1988 to 5.16% in 2011. This clearly adds to transaction costs and contributes to Australia’s high (by international standards) costs of moving.”
The Property Council of Australia says the government must now act to abolish the burdensome tax.
“Taxes are supposed to lean lightly on the economy, not act as a barrier to economic activity, job creation and prosperity. But that is exactly what stamp duty does, and that is why the last major tax review recommended its abolition,” Ken Morrison, chief executive of The Property Council of Australia said.
“Stamp duty inhibits economic activity; it acts as a drag on new construction, on job creation and housing mobility.”
Morrison said the property lobby will be releasing new research and a detailed tax position paper, suggesting other ways the government can fill the revenue lost by abolishing stamp duty.
“We recognise that abolishing stamp duties would mean replacement revenues would need to be provided to fund necessary state government services and we are keen to participate in this debate,” he said.
“It is time for a clean sweep, time to get rid of the bad taxes that impede growth and time for a new blueprint for microeconomic reform that will put Australia on the best path for economic growth, more jobs and the best standard of living.”
The Housing Industry Association also welcomed a discussion on “Australia’s most inefficient tax”.
“Successful taxation reform is vital to ensuring future economic growth and productivity growth commensurate with a rising standard of living for Australia’s future generations,” Shane Goodwin, HIA’s managing director said.
“Stamp duty on property conveyances is Australia’s most inefficient tax, and housing taxation reform can unlock substantial productivity gains and boost economic growth in the Australian economy.”